Organization and Environmental Analysis Essay

Huawei Technologies technical diversification of its portfolio and value addition to its existing products is highlighted by Huawei being ranked amongst the top 5 in the world in terms of essential UMTS patents. By June 2008, Huawei had filed 30,569 patent applications. (Huawei Corporate Information-Huawei Media release). The big inclination towards R&D and strong cost differentiation has enabled Huawei Technologies to achieve what the other dominant players in the telecom industry have been struggling to achieve- customization! .This strong customer focus is also the face of Huawei Technologies projected through its brand logo. The Huawei Technologies brand logo reflects its core principles of â€Å"customer-focus, innovation, steady and sustainable growth, and harmony, conveying Huawei Technologies sincere commitment to helping its customers realizing their potential to launch a variety of competitive services through continuous innovation and an enterprising spirit. † (Huawei Corporate Information-Huawei Media release). The Huawei Technologies logo was recently changed and modified to reflect harmony as also one of its key elements, so as to convey its social responsibility. Huawei Corporate Information-Huawei Media release). This has brought in the much needed image change required by Huawei Technologies primarily being seen as a Chinese vendor. Figure1: Huawei Contract Sales (Source Huawei Corporate Information-Huawei Media release) Opex & Capex leverage which Huawei Technologies has been able to offer its customers has enabled it to demonstrate cost leadership which is evident as 72% of its cont ract sales were from overseas market in 2007. Let alone in 2007, it had 45% increases in its contract sales revenue. See figure 1. Huawei Corporate Information-Huawei Media release). The strong hold which Huawei Technologies is being able to maintain also comes from the socio-political environment it works in as the labour cost in China is one sixth of that of United States or Europe. Thus it has become a key external environmental factor . Internally Huawei Technologies has capitalized on human resource and R&D. But has the cost differentiation been enough, will it still promise growth and more market share? These are the biggest questions which need to be addressed for a guaranteed continuous growth. This question has made Huawei Technologies rethink its marketing strategy towards value proposition, and to value chain analysis (Porter 1985) for a bigger market share. Before that however lies another hurdle of poor quality perception a question mark on the quality of Chinese branding. Issue 2- The dragon brand wagon. With the FMCG market taking blows after blows because of adulterated Chinese raw materials, the general consumer perception on Chinese quality is struggling to establish a stand. Though it specifically affects as said the FMCG market or the business dealing in B2C but the general perception affects all including B2B. And this has been one of the prime challenges. From 1998 to 2001 Huawei was looked at with distrust & doubt . With the Cisco lawsuit the market penetration in the developed economies had become more difficult and required 1000 times more effort as compared to its American or European counterparts. (The Economist, Nov 2007). I believe that the focus needs to be shifted towards creating a strong brand if Huawei Technologies needs to keep its foothold in the global telecom market. Thus strengthening of the Huawei brand has become even more important. Remodeling to establish Huawei as a brand has been now the new focus to develop a better perceived quality & create brand equity. The need of brand recognition has also become very vital to be seen as a valued collaborator for its customers. Brand development has never been big in China; with large volume market brand recognition never existed in the Chinese market. Hence it becomes more essential as well as difficult for Huawei to develop its brand image to compete in the global economy. The strong need for branding and change for the marketing orientation to move towards the service sector becomes more vital when we look into the 5C’s of Huawei Technologies. Issue 4- The 5C’s. Exploring the 5 C’s of Huawei Technologies highlights the core competencies of Huawei and helps us in understanding why a new orientation approach is required . As discussed earlier Huawei Technologies dominates in cost differentiation and is armed with a strong R&D to achieve customization in a high barrier industry and it has been a key strength of Huawei Technologies. But a quick SWOT analysis brings out the lack of perceived quality in the market as one of the greatest threats Huawei Technologies faces. Its major competitor Ericsson currently leading the market share comes with a very strong branding and high perceived quality. The dilemma is not just the market perception but also the perception of the employees themselves despite the fact that human capital is a key resource & strength of Huawei Technologies which also drives to low labor costs.